Vietnam Vietnam unveils draft regulations on renewable energy trading

Vietnam Climate Change
19 June 2024  AOKI Kenji  AOKI Kenji (EnviX, Ltd.)
Vietnam unveils draft regulations on renewable energy trading

On April 15, 2024, the Vietnamese government publicized Draft Decree Governing Direct Power Trading between Renewable Energy Power Producers and High-Volume Power Users (hereinafter referred to as “the Draft”). The Draft stipulates a mechanism for trading of electricity derived from renewable energy sources through dedicated transmission lines and the national grid. “Renewable energy power producers” are businesses that own solar or wind power plants. Although the country has discussed the connection of renewable energy power generated to the national grid to date, the proposed usage of dedicated transmission lines is highlight of the Draft, attracting significant attention from the industrial sector.

 

The following rules are proposed for direct electricity trading between renewable energy power generators and high volume electricity users.

Items Dedicated power lines National power grid
Requirements for renewable energy power producers
  • Construction of power generation facilities shall conform to national and regional power plans and be approved by competent administrative authorities.
  • Permission for electric power activities in the field of power generation shall be obtained.
  • Provisions on safety related to the distribution of electricity in accordance with Article 55 of the Electricity Act of 2004 (including its amended version of 2012) and relevant laws and regulations on explosion and fire prevention shall be observed.
  • Eligible power producers must own their power plants with a designed capacity of 10 MW or more and shall participate directly in the wholesale power market.
  • The first phase will be open to producers who own wind or solar power plants to be connected to the national power grid. The next phase will be to expand to other modes of power generation (hydro, biomass, tidal, geothermal, etc.) based on the needs and developments of the national electricity market.
Requirements for High-Volume Power Users
  • High volume power users who use electricity for their production of products or provision of service shall comply with the provisions on safety on the use of electricity under Sections 57-58 of the Electricity Act 2004 (including its amended version of 2012).
  • Investments in power grid infrastructure shall comply with national technical standards on the safety of high-voltage power grids.

※ There are no restrictions on electricity production capacity, connection voltage, purpose of use, etc. for power producers and users.
  • “High-volume power users” refer to businesses that purchase electricity with connection to grid at a voltage of 22 kV or higher or more and with an average monthly consumption of 500,000 kWh.
  • High volume power users (businesses) located in any of industrial parks, economic zones, or export processing zones shall terminate their contracts with current electricity distributors in the industrial or other zones and switch to direct electricity trading contracts as stipulated in this Decree.

 

For electricity trading, when dedicated transmission lines are used, power producers and power users must execute contracts and notify the competent Bureau of Industry and Trade. On the other hand, when the national grid is used, in addition to the contract between the power producers and the power users, an application for participation in power trading mechanism must be made directly to the host agency of the national power system and power trading market. This application procedure is set forth in Article 24 of the Draft. In addition, the format of the power trading contract shall be as stipulated in Annex 1. The prices of traded electricity will be published to the host agencies of the national power system and electricity trading market in accordance with the Regulations for the Operation of the Wholesale Electricity Market of the Ministry of Industry and Trade (MOIT).

 

Draft Decree on Private Rooftop Solar Power Generation

In addition, on the same day, the MOIT also released Draft Decree on Promoting Rooftop Solar Power Generation for Private Generation and Consumption, which is undergoing public consultation. This draft decree covers only development of rooftop solar power generation intended only for onsite use, not for sale to external entities or individuals. It means that solar developers who participate in the direct power trading described above are not covered by this scheme. The proposed rules for rooftop solar facilities are as follows.

  • Organizations and individuals may choose whether or not to connect their rooftop solar surpluses to the national grid. If connected to the grid, the host operator will have to provide any surplus generated electricity free of charge. (This provision is also proposed in the Draft Decree Governing the Development of Rooftop Solar Power Generation, which was published by MOIT on December 6, 2023.)
  • When rooftop solars for on-site generation and consumption are connected to the national grid, the total generating capacity must not overload the regional grid. If the total capacity exceeds 500 kWp*, connection to a remote control system and a regional power control center is required. On the other hand, if not connected to the national grid, priority will be given to the development of rooftop solars with unlimited capacity.

(*) kWp: kilowatt peak. (Unlike thermal or nuclear power generation, the amount of electricity generated by solar power varies greatly depending on weather and other meteorological conditions. Therefore, in solar power generation, standard conditions are defined and the maximum amount of electricity that can be generated under those conditions is used as a guide for generating capacity.)

 

It should be noted that it is required for rooftop solar power generation for on-site generation and consumption to submit an application to the local Bureau of Industry and Trade, whether or not connected to the national grid. The format of the application form shall be in accordance with Annexes 01 and 02 of this draft decree.

 

 

The original text of each draft decree can be downloaded from the following URL.

Author / Responsibility

AOKI Kenji

Senior Consultant, EnviX Ltd.
General Director, E&H Consulting Co., Ltd.

Business Performance

Expertise in EHS (environment, health and safety) consulting in ASEAN region.
- Environmental regulations updating
- Chemical regulations consulting

Background

MSc in Earth Science, The University of Tokyo

AOKI Kenji